Art Panache, the Sole Employee of Panache Sales, Has Gross

question 150

Multiple Choice

Art Panache, the sole employee of Panache Sales, has gross salary for May of $6,000. The entire amount is under the OASDI limit of $110,100, and thus subject to FICA. He is also subject to federal income tax at a rate of 20%. Which of the following is a part of the journal entry to record the disbursement of his net pay? (Assume a FICA-OASDI Tax of 4.2% and FICA-Medicare Tax of 1.45%.)

• A)debit to Cash for $4,461
• B)credit to Cash for $4,461
• C)debit to Employee income tax payable of $4,461
• D)debit to FICA tax payable of $4,461

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Definitions:

Tax on Good

A financial charge imposed by a government on the sale of a product or service, affecting its price.

Demand Curve

A graph showing the relationship between the price of a good or service and the quantity demanded for it at those prices.

Good Sold

Refers to merchandise or items that have been purchased or exchanged in a transaction.

Tax on Buyers

is a tax that is directly levied on consumers when they purchase goods or services, effectively increasing the purchase price.